When the client of a financial advisor first shows signs of dementia, the first thing the advisor often thinks about is estate planning. After all, dementia and Alzheimer's are forms of incapacitation, which means that a client's estate must be put in order. 

But those who have ever actually dealt with a case of dementia-either in a family member or a client-know that the condition has many nuances and prescriptions, and estate planning is only one item on the list of things to consider. When a client slips into a confused mental state, in fact, there are many planning issues that demand your attention: detecting the condition, understanding the health care and its costs, and thinking about the care for the non-afflicted spouse.

In other words, dementia and Alz­heimer's are a financial planning niche all their own.

It may be unlikely that and advisor would choose to deal with this segment of the population as a specialty. But even if you don't, you must still be aware of the warning signs and ready to deal with your own aging client when the time comes. Fortunately for you, other advisors have dealt with this problem and are willing to share their experiences.

People's familiarity with dementia and Alzheimer's often starts within their own families. Cynthia Conger, a CPA in Little Rock, Ark., has faced dementia in both her mother and a client, and in both cases provided help with treatment. Perhaps the fact that her mother was a bookkeeper by profession made it easier for Conger to initially detect her mother's condition. "The high executive functions of the brain are the first to go," says Conger. "That's what helps the person use logic and math skills. The first thing I saw with my mother, who was a bookkeeper, was she could no longer read and follow directions. She could no longer complete my tax organizer form [or] put the correct information in the correct spaces. Once, she could add up figures in her head. Later, she was writing down all the figures and carrying them for addition. A year later, she couldn't line up her numbers in a column. They were all scrambled."

Next, says Conger, her mother started writing $3 and $5 checks to strange organizations (one whose sole function was to keep Puerto Rico from becoming a state, another set up solely to help pay for the legal expenses of a person who refused to serve with U.N. forces). Conger's mother signed dozens of checks like that every month until she was at the point of going into debt. "My mother was a very bright woman, a businesswoman, my role model on how to be a good single parent and run a business," Conger adds.

It was relatively easy for Conger to detect these new behaviors. But imagine how much more difficult it would be if you didn't live with the person or see them regularly. If the client is married, you might think the spouse would see the problem, right? Not necessarily. Susan Spraker of Spraker Wealth Management in Maitland, Fla., worked with a client and friend, whom we'll call "Sally," for about 15 years. Sally had been just fine when Spraker first met with her and her husband to go over their finances.

A year later, however, Sally had changed dramatically. Visiting her in her home, Spraker found her having trouble breathing and eating. Spraker called a pulmonologist, who admitted Sally to the hospital where she died a week later from lung cancer. Lung cancer, like dementia and most other illnesses, has telltale signs, but it's not always certain a spouse can detect it. "The husband was either not seeing the problem for what it was, or wasn't able to face it-as was my own father when my mother suffered dementia as a result of brain cancer," Spraker says.

Spraker could do very little with Sally, who had only a week to live, and yet she did much. "When her husband didn't seem to know what to do, I followed the doctor's advice and called their two sons. Because of this, the sons flew in and got to see their mother before she died. The children often don't have a clue either, particularly if they're out of town."

Don Nicholson, the owner of Donald W. Nicholson & Associates Ltd. in Wilmington, Del., was one of the founders of the Alzheimer's foundation in his state, a role he took on when he found his mother was suffering from the illness. He now works with people who have these and other illnesses, either the clients or their family members, and can teach other advisors a lot about detecting dementia. Says Nicholson, "Family members will sometimes dismiss mom's behavioral problems, saying, 'Mom's at that age now.' But it's our obligation, as financial advisors, to look a little deeper."

As the problem affected him personally, and not just professionally, Nicholson conducted lots of interviews with medical people to learn more about dealing with dementia. "You have to look for both psychiatric and physical problems, for starters. First, there are memory difficulties, possibly amnesia. We might not notice this problem, in general, but it will usually come out in the context of a conversation. Next we look for aphasia, or difficulty in communicating. Maybe the client doesn't understand what you're saying to him. Then we look for dyspraxia, or motor clumsiness. Does the client drop the pen I've just handed to them? And last, I look for agnosia, a problem with sensory perceptions, such as not remembering who the person that brought them into my office is." Adds Nicholson, "We can't just look at a client like this in terms of their investments."

First lesson: Detection is a big deal. And you can't always depend on family members to let you know your client is acting differently. What's the answer? "You need to get your client in front of you at least once a year," Spraker says. "I like to see my clients twice a year in order to monitor their mental condition. It's important to visit them in their home to see firsthand what's going on. If only one spouse comes in to meetings in your office and says everything's fine with the other half, that spouse could still be home with a very bad situation."

You may also discern that the non-afflicted spouse needs health care, too, because of the strain of being a caretaker. I went through this with my own in-laws. When my father-in-law began showing signs of dementia in 1997, my mother-in-law denied there was a problem, at least until he was eventually unable to manage his own bodily functions. Fast-forward several years, and we began to fear that the extreme physical and psychological demands she endured caring for him might mean she would go first (even though she was 13 years his junior).

Easy, you say, just hire an outside caretaker to come into the home and assist the caretaker spouse. Not so fast. You're assuming the caretaker is willing to let an outsider play that role. My mother-in-law refused help, saying, "He won't let anyone but me take care of him," or "He will reject any stranger who tries to help out." Those things may be true but, in the end, the non-afflicted spouse must get help too or the couple becomes a combined health risk.

Mike Palmer, a principal with The Trust Company of the South in Raleigh, N.C., saw his father-in-law decline under similar circumstances. "My father-in-law, 86, has steadily declined over the last year and cannot be left alone. And while my mother-in-law's in good shape for 84, taking care of him is physically and mentally draining on her. She used to play bridge and have her freedom, her individual time. What's forgotten in these situations is just how fatiguing and draining it is on the care-giving spouse. It's equally important to secure that person's well-being with adult sitters or elder day care." The latter solution-elder day care for his father-in-law-is what ultimately saved Palmer's mother-in-law. "People often think they'll age together [and] go into assisted living together, but it doesn't always happen that way," adds Palmer.

All of which leads to the next lesson: Be involved with your older clients' extended families-especially the children. Usually you heed this advice because you might want to keep the clients' accounts when they die, and that naturally means having a relationship in place with the kids. But it's also important to keep the children in the loop to share in their parents' care and, ultimately, in their critical life decisions if your client comes down with dementia and his or her spouse is in denial.

When Lauren Lindsay of Personal Financial Advisors LLC in Covington, La., heard last November from the wife in a client couple that the husband wasn't doing well (it was just before he would be diagnosed with Alzheimer's), Lindsay knew the children needed to be more involved. She recommended that the couple revise their estate plan. "The husband had responsibilities in the wife's estate that needed to be changed. For starters, various powers had to be gotten out of his name. Ultimately their daughter, who is a physician, became the medical power-of-attorney holder, and the son became the financial power-of-attorney holder."

Second lesson: Get to know your clients' children and stay in touch with them. If they live out of town, you may be the surest link between them and their parents.

Once you've detected the problem and rallied the family around the afflicted client, then you can consider that client's special planning needs. No, dementia and Alzheimer's aren't necessarily death sentences. Says Nicholson, "Back in the late '60s, women with dementia were thought to have about seven and a half years to live, men 12 years. However, these numbers have doubled now with the new medications we have."

"It's a very tough problem," says Gary Greenbaum, founder of Greenbaum and Orecchio Inc., an Old Tappan, N.J., wealth management firm. "Advisors with clients battling dementia must realize that increased time will be required in servicing these clients, particularly if the advisor is helping with bill paying, home repairs, health-care staffing, communication with adult children, attorneys and accountants, etc." The problem, says Greenbaum, is that no one teaches advisors how to deal with the ailing clients and the following issues need to be anticipated:

The situation might pose a conflict of interest for the advisor. He knows he may lose the client once a power of attorney or guardianship is granted and these power holders decide to hire their own advisors.

There will be emotional stress. It's painful for an advisor to watch helplessly as the client slips, slowly, into an Alzheimer's stupor over several years.

There will be uncertainty. The advisor can't be certain exactly when the client is unable to make his own rational decisions; a demented client can be functional one day, but out of touch the next, forgetting to attend meetings, etc.

Lesson not clear? Consider this real-life example of how Greenbaum's admonitions can play out. Pat Raskob of Raskob/Kambourian Financial Advisors Ltd. in Tucson, Ariz., learned that a female client of 14 years who'd survived her husband and had no children was showing signs of dementia. A member of National Advisors Trust Co., Raskob first convinced her over a year's time to move her assets to a trust account and name her brother as her successor trustee. Since then, the illness has progressed, and so has Raskob's workload. "We found when we'd tried to do her taxes that we were missing a lot of the information we needed, so we suggested coming to her home 26 miles from the office to help her collect the info. The client was hesitant; however, we went there and found the tax information she thought she was collecting and keeping appropriately were getting misfiled. We also found she'd mailed out 60 to 70 charitable donations, mostly small amounts, and we had to discuss with her cutting back to just a handful of charities. She thought that was a good idea but forgot about it next year. She'd agree to things in meetings and then forget to do them. When we found out three years ago that she wasn't paying the supplement for her health care, we had to call the insurer and have her benefits reinstated. Then there were several incidents that caused us to recommend she have someone stop in each day and check her blood pressure, so she now has someone coming in a couple of hours a day."

Third lesson: If a client of yours eases into dementia, it changes the entire service mix and, possibly, the fee structure for that client.

Finally, we get to estate planning for the demented client. If you can catch the clients before the dementia completely incapacitates them, says Charles Stanley of Capital Financial Advisors LLC in La Jolla, Calif., it's important "to make sure that the proper estate planning documentation is in place, i.e., durable power of attorney for assets, power of attorney for health care, will, and most likely a living trust. As an RIA with fiduciary responsibility, I need a copy of the complete trust, not just the title page, powers section and signature page that a brokerage firm requires. This is necessary to fulfill the requirements of the Uniform Prudent Investor Act-that the trustee, and me as a co-fiduciary, be able to manage the assets according to the 'purposes and goals' of the trust. It's also required that I be aware of the 'other circumstances' of the trust so I can be of help to a successor trustee, such as a family member, or attorney under the power of attorney. Make sure things are in place long before they're required-both legal documentation and working relationships with successors."

That's the ideal, says Stanley. "In reality, when people begin to enter dementia, they often lose rationality, become angry and won't cooperate with anyone who wants to 'change' anything. Helpers are often seen as someone trying to 'steal my money.' If the transition doesn't take place soon enough, they may begin having hallucinations and things can get really bizarre-sometimes even before the dementia has been diagnosed." Stanley knows this from personal experience, as his mother-in-law developed dementia before she passed away a couple of years ago. He says, "She would exhibit obvious signs of dementia when she was with my wife and me, but when she would go to the doctor for a checkup, she would do whatever she could to appear as alert and 'with it,' and five minutes out of the doctor's office she would be clearly incompetent. It was a real cat-and-mouse game for some time before she no longer had the ability to call on her internal resources to mask her condition."

What else? When Conger's mother began showing signs of dementia, she and her sisters began making changes. "One thing we did was take mom's important documents from her safe-deposit box, closed out the box, and opened a new one in all our names so we wouldn't have to prove incompetency in order to get into her safe-deposit box." Conger also suggests that if the clients aren't in an assisted-living environment when the dementia is first suspected, that steps be taken to get them there-if not immediately, then whenever it's appropriate. "We had mom pick out an assisted-living facility for when the time would come, and put her name on the waiting list. These places are usually hard to get in, but it usually only costs $100 to $500 to get on their waiting list, so whenever they have an opening, people move up on list. Once you reach the top of the list, you'll always be contacted first. Mother got to the top in four years." As her mother became less able to make good decisions, and as she even started getting lost in the city in which she'd always lived, Conger and her sisters had an assisted-living solution ready and waiting.

Dementia is another one of those "not if but when" events. If you remain in business long enough and work with enough clients, you'll be faced with these issues eventually. Will you be ready?

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